20000130CSCE sugar ends up mainly on spreads, but off peak

NEW YORK: CSCE sugar futures settled for the second day running with modest gains on Friday on the back of spread activity although origin pricing and local liquidation knocked the top off the market.

"It finished in the middle of nothing once again. You take out the spreads and there was very little else going on," a veteran broker for a trading house here said.

March sugar rose 0.06 to close at 5.47 cents a lb, trading 5.57-5.41 cents. May inched up 0.01 to 5.59, July was unchanged at 5.84 and the rest were 0.02 cent firmer each.

Sugar futures started unchanged, as expected, and then rode fund rolling and outright speculative buying to higher ground, floor sources said.

The fund covering of their short positions kept spreads on a steady footing, which likewise gave sugar a boost.

Physical brokers estimated the funds accounted for 3,000 contracts on deals in the March/May spreads.

But overhead pricing from Far Eastern and Latin American origins, which had been earlier absent in the market, kept a firm lid on any advance in sugar futures and prevented them from challenging an overhead chart gap in March sugar at 5.62-5.65 cents, they said.

The small speculators who accompanied the market's rise earlier in the session found themselves too long and engaged in some liquidation near the close.

"The locals were looking for stops overhead, could not find it and bailed," a broker said.

Traders said there was practically nothing in the way of physical or fundamental news to nudge sugar either way.

"We're still dealing with an oversupply situation, but those fundamentals are fairly well known," one said.

The market is now awaiting release of CFTC's commitment of traders report which some players feel will show a net short position of around 30,000 lots.

Analyst F.O. Licht said this would be "near the largest historical short figure of approximately 35,000 lots, which the speculators never seem to go over."

Technically, the overhead gap in March sugar of 5.62-5.65 cents continued to represent resistance while support is seen at the recent low of 5.20 and all the way down to 5.00 cents.

Estimated volume traded reached 27,025 lots against the previous estimated total of 25,592 lots.

Call volume touched an estimated 3,848 lots while put volume reached around 2,453 lots.-Reuters